According to the Vietnam Trade Office in Singapore, recently, the Singapore Inland Revenue Authority has issued Guidance for businesses subject to GST in 2024 and announced an increase in Singapore's GST to 9% starting January 1, 2024.
The deal said that despite its relatively stable growth rate over a long period of time, Singapore, like many other countries, is currently suffering from the global economic recession and the aftermath of the Covid-19 pandemic.
Meanwhile, the budget for public health care spending, climate change response, transportation costs and other social support services is increasing. GST is the main and sustainable source of revenue to serve the above-mentioned public services and social support.
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| Faced with rising costs for production, consumption and living, Singaporean businesses will, in the long run, step up their search for suppliers with more affordable prices. Illustrative photo |
From 2022, the Singapore Ministry of Finance has announced a roadmap to increase the GST tax after 15 years of keeping the tax rate unchanged at 7% (since 2007). Accordingly, Singapore's GST tax has increased from 7% to 8% on January 1, 2023 and will continue to increase to 9% on January 1, 2024. Recently, the Singapore Inland Revenue Authority has also issued the Guide for businesses subject to GST in 2024 and announced the increase of Singapore's GST tax to 9% starting from January 1, 2024.
According to experts, Singapore's increase in GST to 9% may affect some areas of business and the Singapore market, such as a decline in consumer spending. Because the increase in GST will lead to an increase in the general price of products and services in the market, causing a negative impact on consumer spending, especially for luxury goods. It can be predicted that people will consider spending less or look for products with more affordable prices and moderate quality.
In addition, the decision to increase GST will also increase cost pressure on Singapore’s small and medium enterprises. The increase in GST will have a deeper impact on the profits of small and medium enterprises. Enterprises in this group are facing increasing costs in terms of labor, logistics and energy, negatively affecting their business operations as they are forced to increase the selling price of their goods and services or seek other suppliers and partners to have lower input prices to ensure business operations.
Even the increase in GST will increase inflation. However, according to the Singapore Government's calculations, inflation will be controlled with the current phased GST increase roadmap.
Faced with the increasing costs of production, consumption and living, the Vietnam Trade Office in Singapore predicts that the consumption trend of the majority of Singaporeans will tighten in the coming time. In the long term, businesses in this country will step up their search for suppliers with more affordable prices. Therefore, Vietnam will be one of the suppliers that Singaporean businesses are very interested in, learn about and wish to cooperate with in the long term.
The Vietnam Trade Office in Singapore requested the Asia-Africa Market Department (Ministry of Industry and Trade) and relevant agencies to step up promotional and display activities to increase the presence of Vietnamese products in the Singapore market.
At the same time, it is necessary to create conditions for organizing trade delegations and direct working sessions between businesses of the two countries to further promote trade connection, trade promotion, industrial investment and services; thereby contributing to increasing import and export turnover of Vietnam and Singapore.
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